U.S. President Joe Biden gives a thumbs up as he walks with First Lady Jill Biden to Marine One on the South Lawn of the White House on July 14, 2023 in Washington, DC.
Drew Angler | Getty Images
washington — Morgan Stanley The Federal Reserve has attributed an unexpected surge in the U.S. economy to President Joe Biden’s economic policies, with such an impact that the bank was forced to make a “substantial upward revision” to its forecast for U.S. gross domestic product.
Biden’s Infrastructure Investment and Jobs Act “A massive infrastructure boom is underway,” Morgan Stanley’s chief U.S. economist Ellen Zentner wrote in a research note Thursday. Beyond infrastructure, “manufacturing and construction also showed broad strength,” she wrote.
As a result of these unexpected gains, Morgan Stanley now expects GDP growth of 1.9% in the first half of this year. That was nearly four times higher than the bank’s previous forecast of 0.5%.
“Growth in the first half of the year was much stronger than we expected, providing a more comfortable cushion for our long-held view of a soft landing,” Zentner wrote.
Analysts also doubled their initial forecast for fourth-quarter GDP growth, to 1.3% from 0.6%. Looking ahead to next year, they raised their forecast for real GDP in 2024 by a tenth, to 1.4%.
“The story behind these numbers tells the story of American industrial strength,” Zentner wrote.
Morgan Stanley’s revisions come at a critical time for Biden in the White House. The president spent the summer touting his economic success across the country. “Together we’re changing this country, not just through jobs, not just through manufacturing, but through rebuilding our infrastructure,” Biden said Thursday during a tour of a Philadelphia shipyard.
The White House has dubbed this model of real-economy growth “Bidenomics,” a term first used by Republicans to attack the president, who later chose it as a badge of honor.
Beyond his legacy, Biden is betting his 2024 re-election campaign on Bidenonomics, betting that strong economic growth and a campaign around the dinner table will eventually drown out Republican culture war rage.
However, this could be a risky bet. Only 37% of respondents to CNBC’s latest National Economic Survey released Thursday approved of Biden’s handling of the economy, while 58% disapproved. A CNBC poll found that just 20% of Americans think the economy is doing well or well, while a whopping 79% say it’s fair or poor.
Republicans have capitalized on voter pessimism about the economy, arguing that Biden is ignoring the ongoing challenges Americans face day-to-day, namely high interest rates and inflation that has declined but remains above pre-pandemic levels.
“Bidenomics is a blind faith in government spending and regulation,” Republican House Speaker Kevin McCarthy said in a statement Friday. “This is an economic disaster that has been made worse by a government that has created decades of high inflation, high oil prices, falling wages and deep uncertainty.”
With 16 months until Americans vote for president, Biden’s political fortunes now appear to be improving along with the economy.
“This report confirms what we have said for a long time: Our strong and resilient economy is Bidenonomics in action,” White House assistant press secretary Mike Kikukawa said in an email to CNBC.
“The president’s economic agenda is to stimulate investment in manufacturing and infrastructure that creates jobs and supports workers.”